How Hagan's husband won stimulus cash

When Kay Hagan voted for President Barack Obama’s 2009 economic stimulus package, the Democratic senator hailed it as “the best way forward for working families across North Carolina.”

One of the families that later benefited is her own.

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JDC Manufacturing, a company co-owned by the Democratic senator’s husband, Chip, received nearly $390,000 in federal grants for energy projects and tax credits created by the 2009 stimulus law, according to public records and information provided by the company.

Hagan’s GOP opponent, statehouse Speaker Thom Tillis, voted in 2010 to allow the state to participate in the federal renewable energy tax credit program, which benefited a bank in which he owns at least $50,000 in stock.

Hagan and Tillis denied acting improperly.

The two are locked in one of the nation’s most important Senate contests this fall, and how they dealt with the $767 billion stimulus package — one of the most far-reaching laws enacted since Obama took office — is among a litany of issues being litigated in the race.

Approached about the matter last week on Capitol Hill, Hagan referred questions to her office.

Financial disclosure statements show that the Hagans’ income from JDC Manufacturing increased from less than $201 in 2008 to nearly $134,000 in 2013. Company representatives said higher rental income account for the uptick, not the stimulus-funded projects that were completed during that span.

In statement to POLITICO, the Hagan campaign said the senator did not help her husband win the federal funding and disputed any suggestion they have profited off the law.

Once she learned of her husband’s dealings, Hagan never involved herself in his efforts to obtain the stimulus grants, her campaign said. She consulted with veteran Democratic attorney Marc Elias over the matter, according to spokeswoman Sadie Weiner.

“Kay is not involved in her husband’s business and had no part in helping JDC apply for or receive these grants,” Weiner said. “Her only involvement was when she made sure that a respected ethics attorney was consulted to ensure that it was appropriate, and the attorney found that it was.”

Senate rules give senators significant leeway in voting for legislation that could benefit them financially, as long as a wider class of investors is affected. They must recuse themselves only if a narrowly targeted bill would specifically benefit a limited class of people that includes the senators themselves. Spouses of senators may enter into contracts with the government so long as improper influence is not exerted by the lawmaker.

Legal experts said there’s nothing improper about Hagan’s actions if the senator, as she says, removed herself from the process of securing the stimulus money. But some argue it spotlights a serious weakness in the ethics rules.

“It simply raises once again the clear problem that the current recusal system ill serves the senators and the members because it leaves too much gray area,” said Meredith McGehee, policy director at the Campaign Legal Center, a watchdog group.

The stimulus package was one of Hagan’s first votes after the former state senator defeated Republican Elizabeth Dole to win her seat in 2008. It passed on a mostly party-line vote, with Republicans decrying it as a big government giveaway and Democrats arguing it would stabilize a cratering U.S. economy. After the vote, Hagan made a strong defense for the program.

“There’s a lot of renewable energy-generating capacity in the stimulus package,” Hagan told The Shelby Star, a North Carolina newspaper, weeks after she cast her vote. “We’re hoping to create enough renewable energy to power 6 million American homes — obviously, that’s not all in North Carolina. This Legislature is going to deliver on our simple promise to change the way things work in Washington, and it’s going to be for those working families and not the special interest.”

In 2012, the Center for Responsive Politics ranked Hagan the ninth-wealthiest senator. She now has a minimum net worth of $9.1 million, according to her most recent financial disclosure reports, though it could be far higher because assets and liabilities are reported in broad ranges. Her husband, Chip, is a partner at a Greensboro law firm but has other business interests, including owning one-third of JDC Manufacturing with his two brothers, John and David Hagan.